Pink Slip is devoted to topics related - however tangentially - to the workplace, business, management, the economy, lay-offs, etc. At least that's how it started out. Now it's whatever pops into my mind.

Friday, April 12, 2013

Scott London: yet another white-collar bonehead who’s wrecked his life for next to nothing

This week has, as always, brought with it enough life-wrecking news to satisfy the most avid WTF-seekers among us.

The other day, it was a posse of drunken Boston College seniors who, while reveling on St. Patrick’s Eve, broke into an apartment and trashed it, causing $25K worth of damage. Of course, given that the damage wasn’t quite enough, they went into the basement of the building and tore a dryer off the wall, severing the gas line and starting a gas leak. They were caught because one of the crew, feeling a bit of post-rampage accountability, called the gas company to report the leak.

Not clear what BC will be doing about these about-to-graduate boyos, but, since there doesn’t appear to be any statute of limitations on Internet “news”, prospective employers and prospective in-laws will no doubt be finding out about them for a good long time to come. The good news is that, perhaps when we approach a zettabyte or yottabyte of data per capita, someone will decide that most “Big Data” is boge data, not worth paying the storage fees on. (Not to mention that at some point all this nonsense data is going to start getting just too big to search.)

Anyway, yesterday brought the news that a former KPMG auditor is being charged by the Department of Justice for passing on confidential info to a pal, who used it to make a bit of walking around money by doing a little insider trading.

Scott London, the info provider, didn’t get all that much for his troubles - except, perhaps, the good long prison sentence that awaits him. Nope, London sold himself up the river in an orange jumpsuit for:

…about $25,000 in cash, a Rolex watch and fancy dinners, London said in an interview with The Times. (Source: LA Times.)

Although he’s also likely to have the benefit of an upcoming orange jumpsuit fitting, London’s golfing buddy made out better:

…Bryan Shaw, an Encino jeweler, …used the information to make about $1 million in stock trades on the two companies.

Those two companies were Herbalife and Skechers, by the way.

The fact that Herbalife may well be a pyramid scheme, well…ain’t life grand?

The criminal complaint filed in federal court Thursday also portrays London as far more culpable and intimately involved in all details of the trading scandal than he had previously acknowledged with The Times and other media outlets.

In some cases, London called Shaw two to three days before press releases of KPMG clients were issued and read him the details that would soon be made public. He also tipped him off to mergers and even strategized with Shaw on how to conceal his trading so that the two would not be caught.

Shaw apparently didn’t do such a good job at “concealing his trading”. The Feds got suspicious about his uncanny market-timing on Skechers and Herbalife, so Shaw was nailed first. It almost goes without saying that he went all full-cooperation/state’s ev. So if he does do time, it will probably be shorter than London’s.

With Shaw’s cooperation, the Feds set up a sting operation involving a bag of cash, handed by Shaw to London in a Starbuck’s. (I’ll have a Venti Latte and a sack of loot, please.)

Both Shaw and London are mea-culpa-ing all over the place.

Shaw:

I cannot begin to apologize for my incredibly stupid actions. There is no excuse for my wrongful conduct. I accept full and complete responsibility for what I have done and know that I will spend the rest of my life trying to make up for my tragic lapses of judgment…I expect that my actions will result in significant civil and criminal consequences, but I realize that this is the painful price I will pay for my transgressions."

London:

"Every day since this occurred I'm saying to myself how stupid I am…I have no idea what I was thinking. I don't know why there was a lapse of judgment but there was."

London said he barely benefited.

"I gained very little," London said. "He gained a lot and yet I bore all the risk."

Advantage Shaw on his my-bad. And note to London: yes, Shaw gained a lot more than you did – it cost him $25K and a Rolex to make $1M? That’s a dandy looking ROI – but you, in fact, did not bear all the risk. But that’s neither here nor there.

The question is how did a couple of middle-aged, middle-of-the-road golfing buds decide that this might be a good idea?

London was a CPA, a KPMG partner. Surely he could have afforded his own Rolex. Did he just want to play the show-off, the guy in the know, with his old pal Bryan Shaw?

And what’s Shaw’s story? Was he sick of being the wholesaler who couldn’t afford the big rocks he was wholesaling?

$25K and a Rolex? Even a million bucks?

Bernie Madoff’s scheming almost makes sense: he was living really large!

But these two-bit crooks?

What a couple of bone heads: careers in shambles, families humiliated, and a good many years of regrets (some behind bars) ahead of them.

Maybe the love of money really is the root of all evil. (Or at least a good part of it.)